Daily Newsletter

26 October 2023

Daily Newsletter

26 October 2023

Gazprom to extend gas supplies to Hungary and China

Hungary has remained close to Russia despite the war in Ukraine.

Alfie Shaw October 24 2023

Russian energy giant Gazprom will supply extra gas to Hungary and China according to an announcement made on Sunday.

Hungary will receive more gas throughout the coming winter and China will be provided with an additional 600 million cubic metres this year on top of contractual obligations.

On a trip to China last week, Russian President Vladimir Putin met with leaders from both countries. Alexei Miller, the boss at Gazprom also travelled with Putin.

Gazprom has sought alternative business since dealings with Europe have been marginalised by the outbreak of the war in Ukraine and the damage caused by an explosion at its Nord Stream pipeline under the Baltic Sea last year. Responsibility for the explosions is still unknown.

Hungarian Prime Minister Viktor Orbán is the only European Union leader to maintain close ties with Putin since the invasion of Ukraine in February 2022. Hungary is also due to take over the rotating presidency of the Council of the EU in late 2024, following terms by Spain and Belgium.

However, in June the European Parliament said it was concerned that Hungary might not “credibly fulfil” the tasks associated with the rotating presidency of the Council due to the government’s “deliberate and systematic efforts” to undermine the bloc’s fundamental values. This related to issues pertaining to the state of democracy within Hungary and its relationship with Russia.

Although Europe as a whole has drastically reduced its dependence on Russian energy since the beginning of the war, Miller was reported by TASS news agency to have said that additional gas supplies to Hungary totalled 1.3bn cubic metres this year.

“And we have an agreement that we will supply additional volumes on an ongoing basis in the coming winter”, he said.

On the Chinese front, Miller added: “We regularly supply additional volumes to the Chinese market. Moreover, we have been doing this for several years now. This year, I think (the extra amount) will be 600 million cubic metres of gas.”

Russia have utilised alternative customers since European nations have attempted to pivot away from reliance on Russian gas. In September 2023, Russia claimed the route for the Power of Siberia-2 gas pipeline to China had been finalised; a development which will lead to increase in gas exports to China. Furthermore, Turkey have become more aligned with the Kremlin on gas matters. In 2022, Turkey imported 40% of its gas supplies from Russia.

Most O&G majors have set net zero targets, but few include Scope 3 emissions

GHG emissions generated by O&G operations accounted for 15% of total energy-related emissions worldwide in 2022. A further 40% of such emissions came from the use of oil and gas for power generation, heating, vehicle fuel, and industrial processes. Only 6 companies have targets covering Scope 3 emissions. To reduce Scope 3 emissions, O&G companies are switching their products to lower-carbon sources of energy including hydrogen, LNG, biofuels, and renewables.

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